Commission looks to sacrifice agriculture to plug Brexit budget hole

The European Commission floated the idea of making significant reductions to the amount of money spent on agriculture as a way to fill a multibillion euro shortfall awaiting Europe’s budget after Brexit.

Confronted with a roughly €12 billion annual funding gap because of the departure of the U.K. from the EU in March 2019, the Commission said Wednesday that the €58 billion-a-year Common Agricultural Policy would come under significant pressure in its plans for spending after 2020.

In three of five possible scenarios presented by the Commission in a reflection paper on how the EU spends its money, the EU’s executive arm suggested lowering the amount of money that goes to farmers. Only in the fifth and final scenario did the Commission say that the CAP could remain untouched.

“Of course, if you reflect upon cuts there can be no area which is immune. Every area needs to be prepared to be more efficient, modernized and be able to accept cuts if necessary,” European Commissioner for Budget Günther Oettinger said at a press conference in Brussels when asked about whether the CAP could be cut under the new budget.

The paper suggests national governments could be called up to make up a shortfall in EU spending on agriculture, through a mechanism of “national co-financing for direct payments.”

Still, Oettinger said that the Commission “would reject any kind of wide sweeping cuts particularly in the area of agriculture.” Any attempt to reduce agriculture spending would be heavily opposed by national farming heavyweights such as France and Ireland.

The Commission’s exercise to tighten its belt comes not only from Brexit but a political shift to fund priority areas such as border control, defense, security and migration. To do this, Brussels is looking at whether all existing instruments inside the budget “are indispensable or whether there is scope for merging or closing programs,” the reflection paper said.

The ideas coming from the Commission will send shivers down the spines of farmers in Europe, who are already grappling with low wages, high suicide rates and pressure to do more to protect the environment.

The Commission’s line follows a proposition from the cabinet of European Parliament President Antonio Tajani to radically overhaul the EU budget by slashing the sum devoted to farmers in favor of issues such as security and immigration.

In the first scenario presented by the Commission, Brussels suggests lowering the relative shares of funds for agriculture and targeting those with special constraints, such as small farms as well as those living in mountainous areas and sparsely populated regions. The scenario also suggests rolling out new risk management tools for farms, such as insurance schemes, and implementing measures aimed at protecting the environment.

The second scenario goes even further by suggesting “significantly” reducing the amount of money for agriculture by providing policy support “only for farmers under special constraints.” The fourth scenario goes further still, suggesting a reduction in direct payments, which represents the lion’s share of CAP funding and goes to farmers based on the size of their land holdings.

Europe’s farming community has already drawn a line in the sand with regards to the prospect of cuts to agriculture spending. Pekka Pesonen, secretary-general of Copa & Cogeca, a large farming lobby, said earlier this week that any cuts in spending would “jeopardize … the delivery of the EU’s environmental and social goals.”

“Farmers’ incomes are already only 40 percent of average EU earnings,” he said, “and have fallen by 20 percent in the past four years.”

The Commission’s paper will feed a discussion between commissioners before the budget proposal for 2021 onward is outlined next year.

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Tony

Hmmm. 12 billion shortfall.
Reduction in the enormous amounts of money paid to farmers, key amongst them the French ones.
Macron has plenty of seats but no real popular democratic mandate
. French unions will use this as an excuse to violently attack his reforms.
The French farmers being amongst the most militant.

What could possibly go wrong?

I suspect this proposal will not get very far. I wonder what sort of horse trading will go on behind the scenes?

Posted on 6/28/17 | 7:29 PM CET

avlas

What about external aid?
There must be some low hanging saving opportunities there, just saying.

Posted on 6/28/17 | 8:03 PM CET

Sub- Continent

It is sensible if the EU-mafia concentrate their energies on internal belt tightening – rather than spitting at, and threatening a valuable trading partner. Note, that this trading partner’s deep pockets have resulted in consistent and significant financial support these past years.

Posted on 6/28/17 | 8:17 PM CET

YellowSubmarine

Amazing how things go full circle, France delayed UK entry into common market until CAP was set up. It then did a U turn and allowed UK in, knowing our extra contributions would be paying for French farmers.

Today as the UK leaves, EU is now having to seriously consider a cut back of subsidies to pre UK membership levels.

I expect this to have a significant influence on a brexit deal, if the UK agrees to provide a few billion per year to EU for full access it might be enough to prop up CAP and head off the French farmers.

Posted on 6/28/17 | 8:20 PM CET

tony

yellow submarine

I think Macron will be seriously concerned about the likely militancy of French farmers who can likely be very disruptive if faced with reforms or a curtailment of their subsidies..

As you say a few billion via the UK to placate them AND for them to continue to have access to Britain is the sort of horse trading that might secure general open access to the benefit of all..

Britain produces many things these days that out of tradition come from france. Somerset and Cornish brie is every bit as good as the French stuff and English wine regularly wins awards and its about time the tasteless French apples were shown the door. Here in Devon the EU provided grants for our orchards to be grubbed up to curb production but many have been replanted on a small scale.

We have a 40 billion a year agricultural trade deficit with the EU so we do have some bargaining chips and the possible militancy of the French farmers might be key amongst them

Posted on 6/28/17 | 8:34 PM CET

alan

Cuts to CAP will be a real trest as to how committed to EU-reform Macron really is.

Added to his own looming cuts to infrastructure spending to stay within budget deficit targets & maintain fiscal credibility this could be the beginnings of a winter of discontent in France

Posted on 6/28/17 | 9:25 PM CET

Greg

can’t wait to see Merkel tell Macron: we need to give you less money for agriculture. LOL

Posted on 6/28/17 | 10:08 PM CET

Tony

Greg

I have the popcorn concession for that meeting. Let’s hope it’s televised.

Posted on 6/28/17 | 11:42 PM CET

Bob

So, in the EU budget, the UK pays in 9 to 12 billion euros a year more than it gets out. By coincidence (?), five years of that overpayment is what the European commission is demanding from Britain as the upfront “price” of exercising the Article 50 right to leave. On one hand, this makes it s pretty obvious why Brexit is happening. On the other hand, the higher the Brexit payment that is demanded by the European commission, the easier it is for Britain to walk away from the table. That is because the greater the amount of money demanded as a Brexit payment, the easier it is to believe that the same amount of money would be better spent by the UK to finance the first five years of a “hard” Brexit. Thus, Brexit is partly prompted by the fact that the UK pays in so more more than it gets out of the EU budget. At the same time, European commission demands for an exorbitant exit payment to make up for the loss of the UK’s overpayment into the EU budget actually risk making the EU situation worse, because the higher the exit payment that is demanded, the more likely it is that negotiations will result in a “hard” Brexit in which the EU budget gets zero from the exiting UK. That explains both where we are and how we got here.

Posted on 6/28/17 | 11:42 PM CET

common

the budget will miss 7,8 Billion.
Well there have to be cuts, that is just the way it are.
And that is if countries do not increase the funding.
But it won´t collapse the EU it is going through a reform progress at the moment. and there will be cuts I highly doubt it will be in agriculture. But who knows we must just wait and see.

Posted on 6/29/17 | 12:23 AM CET

Pexit

@ Tony @ Greg

Yeah such kind of meeting should be diffused to all… one of those great European values is “transparency “…or is that one of the same kind as “Volkswagen rules of law ” …

Posted on 6/29/17 | 1:46 AM CET

Tom Cullem

Oh – they finally realise that the UK leaving is going to blow a hole in their budget?
Well, they could always offer May a cap on the free movement of people, return of control of the fisheries – you know, the kind of things that would have headed off BREXIT in the first place?

Oh, can’t wait to see the farmers’ reactions.

“He who will not when he may/When he will, he shall have nay.

I wonder what would happen if they could reel back time and knowing what they know now, offer Dodgy Dave a much, much better deal to take back to the UK with him?

Posted on 6/29/17 | 4:27 AM CET

Alexandre

Good morning Mr Macron? Welcome to the real world.

And by the way, farmers in these pesky Central Europe states that you love to blame for your problems, receive far less subsidies than farmers in France (surely as a token of this famous European solidarity), so they will adapt faster and better to any cuts.

Posted on 6/29/17 | 8:51 AM CET

bony

The CAP was built to subsidize French, German and Italian farmers. Once the cash stops paying people to turn a blind eye to their democratic freedoms being stole away, those same people will demand those same freedoms back. Long live democracy in Europe!

Posted on 6/29/17 | 11:14 AM CET

maciekimaciek

“if you reflect upon cuts there can be no area which is immune”,

well, except EU beaurocracy, of course.
And the brand new EC headquaters in Brussels for the total renovation of the current ones is 15 years old already and the Berlaymont looks shabby.

Posted on 6/29/17 | 12:27 PM CET

Honest Dave

There goes the EU unity. Just look at how united they were when the wrote their Brexit wish list and came out patting each other on the back. Who would have guessed that Unity would not be so strong when it came to cuts and sacrifices. But remember it’s all about solidarity!!

Posted on 6/29/17 | 2:36 PM CET

Honest Dave

I know I’m being pedantic but accuracy is important and all.

The UK contribution after rebate was €21.409bn. Total EU spend in the UK was just €7.457bn. The net impact is actually €13.951bn. Not 7 or 8 or even 12. That’s close to a 10% cut in every area. Picture gets worse when you add in all the new areas the EU wants to spend in (defence, border force, migration etc).

@tony – I might need to get some popcorn from your stand.

Posted on 6/29/17 | 2:45 PM CET

Dan

One good thing that Britain might do to profit further from this situation is to exploit EU psychology a little further. Now, we know that the EU’s high command are basically rather stupid, since they did not act to try to prevent Britain from leaving the EU and depriving them of the 12 billion Euros per annum that Britain provided. Realistic concessions would have kept Britain in the EU; none were forthcoming.

So, the EU are stupid. How can we exploit this? Perhaps the EU are not only stupid but contrary as well, so why don’t we tell them that the Financial Transaction Tax is a really stupid idea and that they’d do very well to steer well clear of it?

This is nothing but the truth, and if they recognise this, then we are kindly advisers acting in good faith. If they choose to act in a contrary fashion, then we still win because Financial Transaction Taxes (as demonstrated by Sweden, which enacted one) drive away market traders to the closest non-stupid market. As this would be London, we would suddenly gain a lot of European business, which would bring in tax monies for us.

Heads we win, tails they lose.

Posted on 6/29/17 | 6:53 PM CET

Chris

Squeaky bum time in Brussels then… but once the EU sorts out a deal on these cuts, they’ve got the hardest part of Brexit out of the way. Hardest for the EU27, that is.